Question

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? Group of answer choices

Answer 1

All of the above.

Step-by-step explanation:

In economics, it is believed that economic agents which include consumers and producers allocate their scarce resources to the utility/service, and product which would result in the biggest gain. This is done in a bid to not misallocate resources.

All the above-mentioned scenarios represent cases wherein economic agents respond to incentives. For example, in the first case, the consumers of gasoline who are the economic agents would want to allocate a lower price to get more gasoline. The extra gasoline they would get from this gas station is the incentive.